November 9 (SeeNews) - The European Commision said on Thursday it has lowered its projection for Macedonia's economic growth in 2017 to 1.7% from 2.9% previously, due to the prolonged political crisis in the country leading to decline in investments.
"With a new government in office since June, that seems committed to implementing fiscal and structural reforms and to providing support to domestic demand and employment, positive investor sentiment should return. Risks to fiscal sustainability may arise if the government increases corporate and wage subsidies as planned, without implementing durable consolidation measures," the European Commision said in its Autumn 2017 Economic Forecast.
The forecast for Macedonia's economic growth in 2018 has also have been lowered, to 2.7% from 3.2% predicted in the spring edition of the forecast.
Macedonia's 2016 gross domestic product (GDP) growth was hit by a deteriorating investment climate. The country's economy expanded by just 2.9% last year following a much stronger growth of 3.8% in 2015.
The Commission expects consumer prices in Macedonia to rise by 1.2% in 2017 and to increase by 2.0% next year, following deflation of 0.1% in 2016.
"Annual consumer price inflation accelerated in the first half of the year, after three consecutive years of deflation, as recent increases in the prices of food and fuels spilled over into other sectors, in particular transport, communication, hotels and restaurants," the report reads.
Details on Macedonia from the Autumn 2017 Economic Forecast follow (pct change):
| |
2016 |
2017 |
2018 |
| Real GDP growth |
2.9 |
1.7 |
2.7 |
| Inflation |
-0.1 |
1.2 |
2.0 |
| Private consumption |
3.4 |
3.7 |
3.5 |
| Public consumption |
-0.4 |
1.6 |
1.5 |
| Exports (goods and services) |
11.5 |
8.8 |
8.4 |
| Imports (goods and services) |
7.6 |
5.5 |
6.8 |
| Unemployment rate |
23.7 |
22.2 |
21.4 |
| Current account balance, pct of GDP |
-3.1 |
-2.5 |
-2.4 |
source: European Commission